Greater Manchester Waste Disposal Authority is the client for Europe’s largest PFI waste scheme at £3.8bn. Director of contract services David Taylor describes the challenges to NCE.
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From securing over £640M in a recession to achieving planning permission on 27 sites, the proponents of the Greater Manchester waste PFI have certainly faced some interesting challenges. Not least because the team is bringing new technologies into the UK within the mechanical biological treatment (MBT) processes and it is using a dual PFI mechanism to deliver it.
“The scheme is quite unique in that there are two special purpose vehicles (SPVs),” says Greater Manchester Waste Disposal Authority (GMWDA) director of contract services David Taylor. “On one hand there is the Viridor Laing SPV established to design, build, operate and maintain 43 new waste processing facilities over 27 locations and on the other there is the Ineos Chlor TPS Co, whose role is to ensure there is an outlet for the refuse derived fuel that Viridor Laing is producing from the MBT process. “
“The scheme is quite unique in that there are two special purpose vehicles (SPVs).”
There is then a contract between the two SPVs regarding the supply of the fuel source from MBT to TPS Co’s thermal power plant (at the Ineos Cholr facility) in Runcorn. “This did make it more complex because it has not been done before. It was quite a challenge for lawyers and banks to get their heads around and that contributed to an extent to the additional time that was taken to close the contract.”
Of course the other factor affecting timing was the global credit crisis, which led to a number of banks pulling out of the scheme. “That happened at the 11th hour. We had to react very quickly and work very hard to make sure the financial close could still happen,” says Taylor In total the Authority made a contribution of £103M, £68M as a capital investment and £35M from prudential borrowing. The Treasury Infrastructure Finance Unit (TIFU) invested £120M.
“Timing was not good but we got there in the end and that was in part due to a lot of joint working with the TIFU who responded in remarkably quick order. It would have taken considerably longer without their help.”
As for the decision to use MBT with Anaerobic Digestion (MBT-AD) as the main treatment process, Taylor says it was a strategy that fitted perfectly with Greater Manchester’s municipal waste management strategy which looks to divert as much waste as possible away from landfill. “We particularly liked the fact that from MBTAD you are producing methane which is effectively then powering the process plant as well as exporting surplus green energy, of around 5MW, to the national grid. So the fact that the principal facilities are self sustaining was a key factor for us.”
Several technical solutions were suggested to the authority as the bids rolled in, from biodrying facilities to energy from waste, but the Viridor Laing bid was the only one that involved the use of MBT-AD.
The refuse derived fuels from the five MBT-AD plants totalling 275,000tpa will be transported by rail to a new thermal power station at the Ineos Chlor facility at Runcorn. The power station will provide 20% to 30% of its power demand when completed and 80% of its daily steam requirements.
“The fact that the principal facilities are self sustaining was a key factor for us.”
Despite the huge number of facilities, obtaining planning permissions did not throw up any major problems. Taylor says this is down to the enormous amount of pre-application consultation done by GMWDA, Viridor Laing and Costain.
“There was a lot of joint working with Viridor Laing and Costain on planning applications. Prior to all of the process starting the GMWDA did a lot of work with the local planning authorities to help them understand what an MBT plant is, what a Materials Recycling Facility is, taking each of the technologies, discussing the impact that they might have on the local environment so that they can fully understand what was going to be coming to each area. All of that was done well in advance,” he says.
Most of the concerns centred around whether the facilities would be dirty, noisy or smelly. “A lot of that perception comes from the previous facilities whereas the new MBT-AD have odour control and are built under negative pressures to keep odours from escaping,” says Taylor.
With all planning applications approved Costain were able to start on site immediately after achieving financial close on 8 April 2009. To date Taylor says Costain has made good progress with 14 of the 43 facilities already completed but there are still another 28 sites to complete. “The key phase is the next four years as by 2013 all of the facilities will be built. We want to see them built on time, to programme and to budget,” he says.